Karnataka Bank up as merger buzz with Kotak Bank revives

Shares of Karnataka Bank gained 3% on Thursday despite a weak market amid an old buzz that resurfaced. Brokers are again talking about a possible merger between Karnataka Bank and Kotak Mahindra Bank.

According to market sources, Kotak Mahindra Bank which approached Karnataka Bank two years ago with a similar proposal, has once again sent feelers to the old South-based bank.

Karnataka Bank stock price has surged nearly 27% in the past one month amid speculation that talks are on. However, an official from Kotak Mahindra Bank said that there was no truth in the story while a query sent to Karnataka Bank did not elicit a response till the time of going to press.

The Reserve Bank of India had recently directed Uday Kotak, promoter of Kotak Mahindra Bank, to lower his equity stake in the bank from 45.2% to 10% in a phased manner. A takeover could be a way to achieve it.